Angela Rayner’s proposed new penalties for developers who delay building work will reduce the number of new homes being built rather than help the Government hit its 1.5 million new homes target, Housing Forum warns.

Rayner launched a consultation last month on measures designed to tackle so-called ‘land banking’ – where developers acquire sites and then sit on them for years or leave construction unfinished.

Set targets

Under the proposed Build Out transparency rules, developers would need to set out construction timescales when applying for planning permission and publish annual progress reports. Those failing to meet targets could face a ‘Delayed Homes Penalty’ of thousands of pounds per property paid to local councils, who would also potentially be able to acquire stalled sites.

Repeat offenders could then be blacklisted from future planning applications if they fail to deliver on time.

The Housing Forum, which represents councils, housing associations and builders, however, warns the policy will backfire by creating ‘a complex new legal framework’ that adds red tape and delays to an already slow planning process.

We believe that attempting to impose financial penalties on housebuilders for slow buildout rates would be counter-productive.”

Anna Clarke, Director of Policy and Public Affairs at the Housing Forum, told the Daily Express: “Having consulted with our members from across the housing sector – including councils, housing associations, developers and legal firms who advise the sector – we believe that attempting to impose financial penalties on housebuilders for slow buildout rates would be counter-productive.”

Rather than encouraging collaboration, Clarke believes the measures would: “Pit councils and developers against each other in costly and slow legal battles, with councils expressing fears that this could turn into a mud-slinging match between councils and developers over who is to blame”.

Higher costs

The forum argues that contrary to Government assumptions, developers typically buy land to ensure a “pipeline” of sites ready for building rather than to engage in land banking in order to profit from rising land values.

Clarke warns the penalties would increase housing costs by making land purchases riskier, forcing developers to pay more for borrowing. This could make them more cautious about purchasing challenging sites such as brownfield land that requires cleaning up, even though authorities are particularly keen on seeing those kinds of sites developed.